South Africans still live for today and don’t save for the future

Financial experts are still trying to get South Africans to consider their saving habits more seriously.

René Basson, head of brand at Satrix, says it is important to encourage South Africans to make smarter financial decisions by saving for the future. However, not enough people in the country hold the necessary tools in financial literacy.

She is of the view that the best decision would be to make this education accessible from a young age so that it can help promote a healthier savings culture by demystifying the investment process and making it more accessible to more South Africans.

South Africans don’t save

She quotes the government’s commentary on the 2023 baseline survey that revealed 46% of adults live for today, without the stress of what will happen to them financially tomorrow. The survey also revealed that 44% of South Africans do not save and a third do not have a retirement plan.

In the government’s commentary, it expressed concern over the statistics, saying it doesn’t want South Africa to end up with a society that relies on government handouts.

“These findings highlight the importance of financial literacy education in shaping South Africa’s economic future. In today’s economic climate, this education isn’t just beneficial – it’s essential,” says Basson.

She makes mention of two studies by the South African Reserve Bank and Deloitte’s South African Investment Management Outlook that supports the belief that people really do not save. The studies are based on the years 2022 and 2023.

“The country’s savings rate ranged between 0.13% and 0.5%, significantly lagging behind emerging markets like Brazil (16.9%) and India (10.8%).”

ALSO READ: Here’s why you need an emergency fund – and it’s not to buy new golf clubs

Importance of financial education

Basson believes the education system in the country must look at expanding financial education at school level. The approach would help children understand concepts such as compound interest, debt management and investment diversification.

“These practical skills empower young people to make informed decisions about their finances as they enter adulthood and the workforce.”

Introducing financial concepts during the early years will help shape responsible financial behaviours before poor habits form. “For example, a 2023 study on children’s understanding of financial literacy in Malaysia reveals that children start developing money habits when they’re seven.”

The early intervention could enable South Africans to establish a solid foundation for lifelong financial well-being. Children who learn about budgeting, saving, and investing from a young age will likely carry the habits into adulthood, potentially avoiding common financial pitfalls.

ALSO READ: Walking the financial tightrope: education vs retirement

South African value saving

However, Basson’s views are different from Nedbank’s Segment Tracker research released in July this year. Vanesha Palani, Executive: Financial Management from the bank, previously said people have a strong desire to secure their financial futures through savings, but often can’t afford to.

The survey revealed that most people do not have a retirement annuity or provident fund. The findings contained in the survey show that there is an understanding among South Africans about the importance of saving, but there is a difficulty of transitioning from basic savings to long-term financial planning.

NOW READ: How to protect your savings with insurance